In Chapter 11, we take a closer look at supply chains, logistics, and customer service. The growth in e-commerce and online retailing has spiked demand for warehouses—see “ US warehouses are costly and hard to come by, as e-commerce demand picks up ,” (CNBC, June 14, 2017). Use this article to logically project how these trends will impact customer service levels and each of the different costs shown in Exhibit 11-2.

More consumer products companies are turning to direct channels of distribution. When Nike’s new (self-lacing) HyperAdapt sneakers were only available through direct channels at launch. Chapter 10 discusses some of the logic for choosing direct and indirect channels. As you read this article, “ Nike’s HyperAdapt DTC Sales Part of Rising ‘See Now, Buy Now’ Trend ” (brandchannel, December 5, 2016) consider the logic for Nike and other brands discussed. The video below features an interview with some of the innovators behind the Nike HyperAdapt auto-lacing shoes. Why did Nike sell HyperAdapt through direct channels of distribution? Do you think this is a good idea or not? Why or why not?

Amazon appears to be interested in doing “last mile” logistics. “Last mile” refers to delivery from a final warehouse or distribution center to a customer’s door. Right now, Amazon relies mostly on UPS, FedEx, and the U.S. Postal Service to perform this part of the logistics function. Now Amazon appears to be threatening to take over the last mile as well. You can read more about this in “ Amazon Will Deliver Their Own Packages – Revolution At The Delivery Door, ” (Forbes, September 29, 2016). Considering what you learn in chapter 11 and in this article, what are likely the main reasons for Amazon to be considering this delivery [Continue Reading …]

For the last couple of decades, retailers have been experimenting with technology to address the part of grocery shopping consumers hate most – checkout! This USA Today article, “ Can Amazon Fix the Grocery Game? ” (December 8, 2016) provides a quick overview of six technology solutions that have been or will be used soon – from self-checkout to smart appliances. Do you think the new Amazon Go checkout system will revolutionize the grocery business? Which of the other solutions show the greatest promise? What criteria should be used to evaluate this type of technology?

Whole Foods has seen its sales and profits decline recently. In response, the food retailer has opened some new stores under the name 365. Read more about 365 in this article “ Whole Foods Is Getting Killed by Aldi. Is a Millennial Grocer Chain the Fix? ” (Bloomberg Businessweek, June 20, 2016). What is the target market for Whole Foods new 365 stores? Is this different from a typical Whole Foods store? How is the 365 marketing strategy (compare each of the 4 Ps) different from that used by Whole Foods? Do you think it will work?

Silicon Valley startup Zipline is delivering blood and emergency medicine to rural areas of Rwanda. You can learn more about Zipline in the YouTube video below. Review the discussion of Exhibit 11-2. Estimate how Zipline’s drone delivery effects inventory cost, cost of lost sales, and transportation costs as compared to possibly shipping supplies by car/truck over 200 miles of jungle roads. This will of course require you to make some estimates on costs, provide a an explanation. Estimate how Zipline’s drone delivery might be evaluated if it was added as a row in Exhibit 11-5.

The What’s Next? box in chapter 10, “Bits and bytes need distribution, too” describes how digital products require many of the same regrouping activities as physical goods. Sean Parker (best known for starting Napster and later as the first president of Facebook) has developed a new product (Screening Room), which would “allow people to watch movies at home on the same day they make their big-screen debuts.” The Screening Room is shaking up Hollywood which is used to a gradual evolution in distribution channels. Most movies play in theaters (where consumers pay relatively higher prices) for their first few months, before moving to [Continue Reading …]